Credit Union Exam Solutions Presents With Flying Colors GOVERNANCE ESSENTIALS: BUILDING AN EFFECTIVE ALCO COMMITTEE STRUCTURE
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Jan 7, 2025 Todd Miller, a veteran with 34 years at the NCUA, shares valuable insights on building effective Asset and Liability Management Committees (ALCO) in credit unions. He discusses the importance of distinct committee charters, member selection, and how board involvement can enhance governance. The conversation also highlights the critical roles of the Chief Risk Officer and the necessity of robust documentation to align with strategic objectives. Miller emphasizes that a well-structured ALCO is key to managing risks and adapting to organizational needs.
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Centralize Committee Responsibilities
- Create charters for committees, even in smaller credit unions, to centralize responsibilities.
- This is more efficient than scattering responsibilities across multiple policies.
Charter Components
- Define the purpose, roles, meeting frequency, responsibilities, authority, and reporting requirements of the committee in its charter.
- Also, specify performance metrics, documentation requirements, and delegation procedures.
Board Involvement
- Board member involvement in ALCOs is challenging due to time constraints, especially in larger credit unions.
- Smaller credit unions may benefit from board participation, while larger ones may use separate staff and board ALCOs.